There is no strategy without targets

In 2018 WBCSD published a Circular Metrics Landscape Analysis, noting a pattern in how companies measured and communicated about their circular economy achievements. That study found that 70% of the circular metrics used at the time were classified as either “End of Life” or “Operations” indicators, such as recycling rates and waste diverted from landfill. For comparison, Design, Distribution and Use phase indicators only accounted for 11% total of all “circular metrics” observed at the time.

This landscape analysis informed the direction of what would become the Circular Transition Indicators (CTI), which would be published in its first iteration CTI v1.0 in January 2020. Since then, WBCSD has published CTI v2.0 earlier this year and integrated all framework updates into the free, online CTI Tool at www.ctitool.com.

Of the survey respondents who measure their circularity today, CTI is the most used framework globally. Surprisingly, CTI is used twice as frequently in small and very small companies as large and very large companies, demonstrating its accessibility.

However, a vast majority of respondents (65.6%) who do measure their circularity still use their own circular metrics and KPIs. The challenge that this creates is that once those KPIs are communicated beyond the companies four walls, including to investors, customers and key stakeholders, interpretation is difficult.

However, while 55.7% of respondents have set goals and targets on circularity, only 43.9% have already determined a circular performance baseline. Recognizing the importance of using data to drive decision-making in business decision-making (including sustainability), companies have room for improvement in establishing a circular performance baseline prior to setting appropriately ambitious targets.

Until an objective, circular performance baseline is understood by companies, circular economy efforts will remain niche, ad hoc and short of driving scale and affecting the organizations strategy. In the end, this may present a risk to companies of being perceived as “circle-washing” as measurement is focused more on communications than on strategic decision-making.

Where is your company on the Circular Maturity Curve?

Depending on region, industry and value chain position, a company will likely find itself in a similar stage of the Circular Maturity Curve as its peers. It provides an opportunity for a comprehensive reflection of the actions and ambitions the company have in moving towards circularity. Ultimately, the importance of measuring the baseline performance of the company’s circularity is small compared to how much it improves in time.

We cannot move forward in our circular transition without knowing where we stand today. Governments, from municipal to national, and businesses, from SMEs to MNCs, will find increasing pressure to know not only where it stands with respect to circularity but also chart a path towards decoupling resource consumption and economic performance.

Figure 1 Circular Maturity Curve of a Typical Company. Adapted from WBCSD & BCG's The New Big Circle Report (2019)

Author: Brendan Edgerton - Director, Circular Economy, WBCSD